Vantage FX (www.vantagefx.co.uk) look at how to spot trends in Forex.
Trend-spotting Week
Today we are looking at a EUR/USD chart since May, analysing at what point the markets turn bullish, bearish and sideways.
We can see that from May to mid-June we are bullish as we are moving upwards, then from mid-June to early July we turn bearish as the highs are getting lower. Then during the rest of July we are bullish again, in August we see a messy range bound sideways market, and in September we are bullish again but still range bound.
How do you know when a trend has changed?
Some use percentages, for example if you're moving down then bounce back by only a small percentage, you can forget it. You could also draw trend lines and where it breaks you're no longer in bullish or bearish mode. You may well need to re-draw the trend lines.
It is important to note that the market doesn't always trend, and often when it doesn't trend you are in easier trading ranges.
